Technology Transfer: Reporting Requirements for Federally Sponsored
Inventions Need Revision (Letter Report, 08/12/1999, GAO/RCED-99-242).
Pursuant to a congressional request, GAO provided information on the
government's rights to inventions under the Bayh-Dole Act and Executive
Order 12591, focusing on whether federal agencies: (1) ensure that
contractors and grantees are complying with the provisions of the
Bayh-Dole Act and Executive Order 12591 on the disclosure, reporting,
retention, and licensing of inventions created under federally funded
projects; and (2) exercise their rights to use the royalty-free licenses
to which they are entitled.
GAO noted that: (1) federal agencies and their contractors and grantees
are not complying with provisions on the disclosure, reporting,
retention, and licensing of federally sponsored inventions under the
regulations implementing the Bayh-Dole Act and Executive Order 12591;
(2) in GAO's review of more than 2,000 patents issued in calendar year
1997 as well as an Inspector General's draft report on 12 large grantees
of the National Institutes of Health, GAO found that the databases for
recording the government's royalty-free licenses are inaccurate,
incomplete, and inconsistent and that some inventions are not being
recorded at all; (3) as a result, the government is not always aware of
federally sponsored inventions to which it has royalty-free rights; (4)
few statistics were available on how federal agencies exercise their
rights to federally sponsored inventions; (5) agency officials said the
primary benefits of the royalty-free licenses are that the government
can use the underlying research without concern about possible
challenges that such use was unauthorized; and (6) the licenses normally
would not be a means by which the government could lower its procurement
costs by avoiding the payment of royalities, as royalities are not a
factor in most federal procurements.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: RCED-99-242
TITLE: Technology Transfer: Reporting Requirements for Federally
Sponsored Inventions Need Revision
DATE: 08/12/1999
SUBJECT: Reporting requirements
Noncompliance
Patents
Patent law
License agreements
Technology transfer
Royalty payments
Research and development
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Cover
================================================================ COVER
Report to the Chairman, Committee on the Judiciary, U.S. Senate
August 1999
TECHNOLOGY TRANSFER - REPORTING
REQUIREMENTS FOR FEDERALLY
SPONSORED INVENTIONS NEED REVISION
GAO/RCED-99-242
Federally Sponsored Inventions
(141200)
Abbreviations
=============================================================== ABBREV
DOD - Department of Defense
DOE - Department of Energy
FAR - Federal Acquisition Regulation
GAO - General Accounting Office
HHS - Department of Health and Human Services
NASA - National Aeronautics and Space Administration
NIH - National Institutes of Health
NSF - National Science Foundation
PTO - Patent and Trademark Office
Letter
=============================================================== LETTER
B-280091
August 12, 1999
The Honorable Orrin G. Hatch
Chairman, Committee on the Judiciary
United States Senate
Dear Mr. Chairman:
Under the Patent and Trademark Laws Amendments of 1980, as amended
(commonly known as the Bayh-Dole Act), small businesses, nonprofit
organizations, and certain contractors operating government-owned
laboratories may retain title to and profit from the inventions they
create under federally funded research projects. Executive Order
12591, issued April 10, 1987, essentially extends these same
privileges to large businesses. To gain these rights, a contractor
or grantee must follow certain reporting and other requirements.
Among these requirements are notifying the funding agency that an
invention has been created, informing the agency that the contractor
or grantee intends to retain title to the invention, filing a patent
application, and submitting documentation that acknowledges the
government's royalty-free license to use the invention. If the
contractor or grantee fails to follow these requirements, the
government may acquire title to the invention.
You requested that we conduct a study of the government's rights to
inventions under the Bayh-Dole Act and Executive Order 12591. As
agreed, our objectives were to determine whether federal agencies (1)
ensure that contractors and grantees are complying with the
provisions of the Bayh-Dole Act and Executive Order 12591 on the
disclosure, reporting, retention, and licensing of inventions created
under federally funded projects and (2) exercise their rights to use
the royalty-free licenses to which they are entitled.
To determine compliance with the requirements, we compared data
maintained by the Department of Commerce's Patent and Trademark
Office (PTO), funding agencies, and selected contractors and grantees
on more than 2,000 patents that were issued in calendar year 1997 and
appeared to be the result of federal funds. We also obtained
information developed by the Inspector General of the Department of
Health and Human Services (HHS) on the reporting of inventions under
National Institutes of Health (NIH) grants. To determine how the
government uses its royalty-free licenses, we obtained information
directly from agencies that are among the largest in terms of
research funding and procurement, compared the provisions of the
Bayh-Dole Act and Executive Order 12591 with federal procurement
regulations, and discussed the effects on royalties received by 10
contractors and grantees selected for site visits. Additional
details on our scope and methodology are included in
appendix I.
RESULTS IN BRIEF
------------------------------------------------------------ Letter :1
Federal agencies and their contractors and grantees are not complying
with provisions on the disclosure, reporting, retention, and
licensing of federally sponsored inventions under the regulations
implementing the Bayh-Dole Act and Executive Order 12591. In our
review of more than 2,000 patents issued in calendar year 1997 as
well as an Inspector General's draft report on 12 large grantees of
the National Institutes of Health, we found that the databases for
recording the government's royalty-free licenses are inaccurate,
incomplete, and inconsistent and that some inventions are not being
recorded at all. As a result, the government is not always aware of
federally sponsored inventions to which it has royalty-free rights.
Few statistics were available on how federal agencies exercise their
rights to federally sponsored inventions. Agency officials said the
primary benefits of the royalty-free licenses are that the government
can use the underlying research without concern about possible
challenges that such use was unauthorized. The licenses normally
would not be a means by which the government could lower its
procurement costs by avoiding the payment of royalties, as royalties
are not a factor in most federal procurements.
This report includes matters for congressional consideration designed
to improve the government's ability to exercise its rights in
federally sponsored inventions. We note that the Congress may wish
to consider enhancing the data available on these inventions by
standardizing, improving, and streamlining the reporting process for
inventions subject to the Bayh-Dole Act and Executive Order 12591.
BACKGROUND
------------------------------------------------------------ Letter :2
Prior to 1980, the government generally retained title to any
inventions created under federal research grants and contracts,
although the specific policies varied among the agencies.
Increasingly, however, this situation had become a source of
dissatisfaction. One reason was a general belief that the results of
government-owned research were not being made available to those who
could use them. Another was a concern that advances attributable to
university-based research funded by the government were not pursued
because the universities had little incentive to seek uses for
inventions to which the government held title. In addition, the
rules and regulations and the lack of a uniform policy for
government-owned inventions often frustrated those who did seek to
use the research.
The Bayh-Dole Act was intended to address these concerns by creating
a uniform patent policy for inventions resulting from federally
sponsored research and development agreements. The act was
applicable to small businesses, universities, and other nonprofit
organizations and generally gave them the right to retain title to
and profit from their inventions, provided they adhere to certain
requirements. The government retained nonexclusive, nontransferable,
irrevocable, paid-up (royalty-free) licenses to use the inventions.
Bayh-Dole did not apply to large businesses, generally defined as
those that have more than 500 employees. However, on February 18,
1983, President Reagan issued a Presidential Memorandum to the
executive branch agencies that extended the patent policy of
Bayh-Dole to any invention made in the performance of federally
funded research and development contracts, grants, and cooperative
agreements to the extent permitted by law. In 1984, the Congress
amended the Bayh-Dole Act to include contractors operating
government-owned laboratories. The 1984 amendments also specified
that the act did not preclude agencies from allocating rights to
inventions as provided in the Presidential Memorandum, but that
organizations acquiring these rights would be subject to certain
requirements of Bayh-Dole. On April 10, 1987, the President issued
Executive Order 12591, which, among other things, required executive
agencies to promote commercialization in accordance with the 1983
Presidential Memorandum.
The Bayh-Dole Act was implemented through regulations issued by the
Department of Commerce in 1987.\1 Similarly, the patent rights
policies set out by the act and Executive Order 12591 are embodied in
parts 27 and 52 of the Federal Acquisition Regulation (FAR).\2 The
regulations define the rights and responsibilities of the parties.
--------------------
\1 37 C.F.R. part 401.
\2 48 C.F.R. parts 27 and 52.
CONTRACTORS AND GRANTEES ARE
SUBJECT TO SPECIFIC
REPORTING REQUIREMENTS
---------------------------------------------------------- Letter :2.1
Contractors and grantees are required to follow specific reporting
requirements on the disclosure, election to retain title, application
for patent, licensing, and commercialization of an invention subject
to the Bayh-Dole Act or Executive Order 12591. Similarly, the
funding agencies are supposed to ensure that the government obtains a
record of the rights to which it is entitled and that these are
recorded in centralized databases available to potential users of the
technologies involved. The regulations set out the following
rationale:
�It is important that the Government and the contractor know and
exercise their rights in inventions conceived or first actually
reduced to practice in the course of or under Government
contracts in order to ensure their expeditious availability to
the public and to enable the Government, the contractor, and the
public to avoid unnecessary payment of royalties and to defend
themselves against claims and suits for patent infringement.�\3
Contractors and grantees are required by statute and regulation to
meet various requirements on the use and reporting of inventions
covered by the Bayh-Dole Act and Executive Order 12591. Some of the
key requirements\4 are as follows:
-- The contractor or grantee must disclose to the appropriate
federal agency any invention created with the use of federal
funds within 2 months of the date the inventor discloses the
invention in writing to the contractor or grantee.
-- If the contractor or grantee decides to retain title to the
invention, it generally must notify the agency within 2 years of
the date of disclosure that it has elected to do so. In cases
in which publication, sale, or public use has initiated the
1-year statutory period in which valid patent protection can be
obtained in the United States, the agency may shorten the period
of election to not more than 60 days prior to the end of the
statutory period.
-- The contractor or grantee must apply for a patent on the
invention within 1 year of its election to retain title or
within 1 year of the publication, sale, or public use in the
United States, whichever is earlier. In applying for a patent,
the organization must add a government interest statement that
discloses the government's rights to the invention.
-- The contractor or grantee must provide the government a written
instrument confirming the government's nonexclusive,
nontransferable, irrevocable, paid-up license to use the
invention. The government's license is commonly referred to as
the �confirmatory� license.
-- The contractor or grantee must attempt to develop or
commercialize the invention.
-- If the contractor or grantee is a nonprofit organization, the
contractor or grantee generally must give priority to small
businesses when licensing the invention.
-- When granting an exclusive license, the contractor or grantee
must ensure that the invention will be "manufactured
substantially" in the United States.
-- If the contractor or grantee is a nonprofit organization, the
contractor or grantee must share a portion of the royalties with
the inventor(s).
--------------------
\3 48 C.F.R. 27.305-1(a).
\4 These requirements are found in 37 C.F.R. part 401 and 48 C.F.R.
52.227-11 (short form) and are generally applicable when the
contractor is a small business, a nonprofit organization, or any
other contractor except for those with contracts involving the
departments of Defense and Energy or the National Aeronautics and
Space Administration.
MONITORING RESPONSIBILITIES
ARE DIFFUSED AMONG MANY
AGENCIES
---------------------------------------------------------- Letter :2.2
No single federal agency is responsible for monitoring compliance
with the Bayh-Dole Act or Executive Order 12591, although the
Department of Commerce was given the responsibility for drafting
Bayh-Dole regulations. Rather, the agency responsible for funding
the contract or grant that led to the invention is also responsible
for ensuring that the requirements are followed. If the contractor
or grantee does not disclose the invention, does not elect title
within the established periods, or elects not to retain title, the
agency may acquire title to the invention if the agency makes a
written request within 60 days after it learns of the failure of the
contractor or grantee to make the proper disclosures or elections.
The agency can also require the contractor or grantee to grant a
nonexclusive, partially exclusive, or exclusive license in any field
of use to a responsible applicant under terms that are reasonable
under the circumstances if, for example, the organization does not
develop or commercialize the invention or if action is needed to
alleviate health or safety concerns. This is known as the
government's �march-in� right.
After receiving the confirmatory license, the funding agency is
required to file it with PTO. PTO then records the license in the
Government Register. The Government Register was created by
Executive Order 9424 in 1944 and, among other things, is the official
register for the government's rights to federally sponsored
inventions. Prior to May 1995, PTO maintained the Government
Register in a card file. Confirmatory licenses recorded since that
time are maintained in an electronic database. PTO also maintains
the official patent database that provides the full text of issued
patents. For federally sponsored inventions, the text should include
the government interest statements submitted with the applications
for patents.
AGENCIES ARE NOT ENSURING
COMPLIANCE WITH REQUIREMENTS
------------------------------------------------------------ Letter :3
Government agencies, contractors, and grantees are not complying with
the reporting requirements for inventions subject to the Bayh-Dole
Act and Executive Order 12591. We reviewed more than 2,000 patents
issued in calendar year 1997 and found that the official records on
federally sponsored inventions�PTO's patent database and Government
Register�were in agreement only about 6 percent of the time. We were
unable to resolve many of the anomalies during follow-up work at the
funding agencies and 10 contractors and grantees. Furthermore, we
identified other inventions that had not been reported at all. The
HHS Inspector General found similar problems in a draft report on the
invention-reporting activities by 12 large grantees of NIH.
Besides being inaccurate, incomplete, and inconsistent, the databases
on federally sponsored inventions can be difficult to use. Also, the
reporting requirements are often redundant and complicated, placing
an unnecessary burden on the agencies and their contractors and
grantees. We believe the reporting requirements could be streamlined
and improved.
RECORDS ON THE GOVERNMENT'S
RIGHTS ARE INACCURATE,
INCOMPLETE, AND INCONSISTENT
---------------------------------------------------------- Letter :3.1
PTO should have two independent records of the government's rights to
a federally sponsored invention�the government interest statement on
the patent and the confirmatory license recorded in the Government
Register. However, PTO provided us with information showing that
while 2,083 patents issued in 1997 had either a government interest
statement or a confirmatory license on file, only 128, or 6.1
percent, were recorded in both databases. Of the remaining 1,955
cases, 72, or 3.5 percent, appeared only in the Government Register,
while 1,883, or 90.4 percent, had only a government interest
statement on the patent.
PTO officials told us that they record only the information they are
given by the applicants and agencies. They are not required and do
not attempt to verify the data provided or to reconcile the databases
with each other. Thus, they could not explain the anomalies between
the data recorded in the Government Register and the data recorded on
the patents. For this reason, we elected to contact each of the
funding agencies for the patents in question to determine whether
they could provide explanations.
FUNDING AGENCIES DID NOT
RESOLVE ANOMALIES
---------------------------------------------------------- Letter :3.2
We attempted to determine the causes of the anomalies by obtaining
information directly from the funding agencies. However, we were
unable to identify some of the agencies when the only record was the
government interest statement on the patent because the reference to
the agency was not specific. For example, some references were to
the �U.S. Government� or to a federal department rather than to a
specific agency. Also, sometimes no contract or grant was cited that
could be referenced to a specific agency.
We selected 1,746 cases for further review, of which 72 represented
cases in which only confirmatory licenses were on record and 1,674
represented cases in which only government interest statements were
on record. About 92 percent of the 1,746 cases were concentrated in
the five federal agencies�NIH, the National Science Foundation (NSF),
the Department of Defense (DOD), the Department of Energy (DOE), and
the National Aeronautics and Space Administration (NASA)�that provide
the bulk of research and development funds to contractors and
grantees.
For each case, we contacted the funding agency to determine why the
patent database and the Government Register were in disagreement. We
asked the agencies to review their files to determine whether they in
fact were responsible for funding the research that led to the
inventions, whether they had received the reports required from the
funded organizations, and whether they had filed confirmatory
licenses with PTO or verified that government interest statements
were recorded on the patents. As shown in appendixes II and III, the
agencies were able to explain a number of these cases; however, they
were not able to resolve 1,222, or 70 percent, of the 1,746 cases
forwarded to them.
Figure 1 shows the agencies' responses in the 72 cases in which
confirmatory licenses were recorded in the Government Register but
government interest statements did not appear on the patents.
Appendix II provides the statistics for each agency queried.
Figure 1: Results of GAO's
Inquiries to Agencies About
Patents Issued in Calendar Year
1997 That Did Not Include
Government Interest Statements
(See figure in printed
edition.)
Note: Percentages do not total 100 percent because of rounding.
Source: GAO's analysis of data provided by government agencies.
The agencies gave varied responses about the absence of government
interest statements on the 72 patents in question. For 24, or 33.3
percent, the agencies said that they had received copies of the
patents, and for 21 of these, they either had ensured government
interest statements were included already or had required the
applicants to file corrections with PTO to include the statements.
Thus, the agencies said government interest statements should have
appeared on these 21 patents but did not explain the omissions. In
the other three cases, the agencies said that they had received
patent applications from the funded organizations but did not confirm
that they included government interest statements.
In 16, or 22.2 percent, of the 72 cases, the agencies said they had
not received patent applications on the inventions in question. In
the remaining 32, or 44.4 percent, of the cases, the agencies did not
respond to our inquiries.
Figure 2 shows the agencies' responses for the 1,674 cases in which
government interest statements were recorded on the patents but
confirmatory licenses did not appear in the Government Register.
Appendix III provides the statistics for each agency queried.
Figure 2: Results of GAO's
Inquiries to Agencies About
Patents Issued in Calendar Year
1997 That Were Not Recorded in
the Government Register
(See figure in printed
edition.)
Source: GAO's analysis of data provided by government agencies.
According to their responses, the agencies had received confirmatory
licenses from the contractors and grantees in 472, or 28.2 percent,
of the cases. In 183 of these cases, the agencies said that they had
filed the licenses with PTO but did not explain why they did not
appear in the Government Register. In the remaining 289 cases, the
agencies said that, for various reasons, they had received
confirmatory licenses but had not filed them with PTO. For example,
officials from NSF�which had 60 confirmatory licenses on hand that
had not been filed with PTO�said they did not believe such
recordation was necessary. They reasoned that the government has an
automatic license based on the provisions of Bayh-Dole regardless of
whether a confirmatory license is received or filed with PTO. Other
agencies did not explain why they had not filed the licenses.
In 28, or 1.7 percent, of the cases, the agencies responded that a
confirmatory license was not required on a particular invention. The
reasons were that the agency had not actually financed the invention,
that the projects under which the inventions were created were not
subject to the Bayh-Dole Act or Executive Order 12591, or that the
government was actually an owner of the invention and did not need a
license.
The agencies did not resolve the remaining 1,174 cases. In 491, or
29.3 percent, the agencies said they had not received confirmatory
licenses from the contractors or grantees. In 81, or 4.8 percent,
they said they did not know whether they had received confirmatory
licenses. In the remaining 602, or 36 percent, the agencies did not
respond to our inquiries.
SOME INVENTIONS HAD NOT BEEN
REPORTED
---------------------------------------------------------- Letter :3.3
We conducted follow-up work at 22 contractors and grantees to
determine the reasons for the discrepancies on their inventions.\5
While they were able to explain many of these cases, we were still
unable to resolve 81 of the 348 cases involved. Moreover, we
identified 11 other inventions that had not been reported at all.
In the majority of the 348 cases, the contractors and grantees
responded that they had followed the reporting requirements as they
understood them, filing a confirmatory license on either the patent
in question or on a parent application\6 of that patent. In 93, or
26.7 percent, of the 348 cases, the organizations provided
documentation to show that they had filed confirmatory licenses with
the agencies on those patents. They could not tell us why the
government did not have a record of these licenses but offered
possible reasons based on the documentation available in their own
files. Some licenses apparently had been sent to the agencies with
incorrect or missing grant numbers or did not contain patent
application serial numbers. Contractor and grantee officials said
that in such instances, the funding agencies may not have been able
to link the licenses to particular research grants or patents.
Another explanation offered was that some inventions were funded by
more than one agency and the organization had sent a confirmatory
license to only one of the agencies. The officials said that the
agency responding might not have been the agency with the license.
Still another explanation given was that some of the licenses had
been filed recently and might not have been entered into an agency's
database at the time we asked the agency for information.
In an additional 161, or 46.3 percent, of the 348 cases, the
contractors and grantees responded that they had not filed
confirmatory licenses for the patents cited but were not in error
because they had filed licenses on parent applications. They told us
that the confirmatory licenses filed on these parent applications
specifically stated that the licenses covered all additional patents
flowing from those parents. It was their understanding that this
meant new confirmatory licenses were not needed for these other
patents unless the inventions covered new subject matter. They also
said that the agencies had agreed with this interpretation. In
subsequent discussions with agency officials, they generally agreed
with this interpretation, even though we could find no documentation
to this effect in any written procedures.
In 13, or 3.7 percent, of the 348 cases, contractor and grantee
officials provided documentation to show that they were not required
to file confirmatory licenses. In nine of the cases that had
government interest statements recorded on the patent applications,
the officials determined that the inventions were not created under
federally funded projects. The officials said that, while a
correction to the patent in such an instance may have been in order,
there was no need or requirement to file a confirmatory license. In
three cases, they said confirmatory licenses were not required
because the government was actually a co-owner of the inventions and
had rights that superceded those that would have been included in any
licenses. In the final case, the grantee had waived title to the
invention to the inventor and had no responsibility to file a
confirmatory license.
The contractors and grantees were not able to resolve the database
anomalies in 81, or 23.3 percent, of the 348 cases. In 71 of these,
they acknowledged that they had not filed licenses as required. In
the other 10 cases, they did not locate any documentation on the
inventions in question. They did not explain the omissions in any of
the 81 cases, however. Each had implemented systems and processes
designed to ensure that federally sponsored inventions were reported
as required.
During visits to 10 contractors and grantees, we asked the
contractors and grantees whether there might be federally sponsored
inventions that had not been reported at all. In this regard, we
reviewed other patents that were issued to them during calendar year
1997 that did not contain government interest statements and for
which no confirmatory licenses were on file at PTO. In each case, we
asked contractor or grantee officials to show us from the records
available how they determined that the inventions were not the result
of government funding.
Our review of 56 patents showed that 11, or 19.6 percent, of the 56
inventions in question had not been reported even though the
inventions appeared to have been the result of government funding.
Officials from the five contractors and grantees responsible for
these 11 patents agreed with our findings but did not explain why the
inventions had not been reported. Again, each had systems designed
to ensure that all government-sponsored inventions were disclosed.
--------------------
\5 These contractors and grantees consisted of 14 universities, 5
other nonprofit organizations, and 3 for-profit corporations. In
total, they accounted for 348, or 29.6 percent, of the 1,174 cases
for which the funding agencies had not been able to explain why
government interest statements had been recorded on the patents but
confirmatory licenses had not been received.
\6 A parent application is the original application for a particular
patent. Subsequent applications may relate back to the parent.
HHS' INSPECTOR GENERAL FOUND
NIH-FUNDED INVENTIONS WERE
NOT BEING REPORTED
---------------------------------------------------------- Letter :3.4
In a 1994 report concerning the reporting of inventions by a major
research institute, HHS' Inspector General identified weaknesses in
NIH's procedures for monitoring compliance with the provisions of the
Bayh-Dole Act and recommended that NIH establish procedures to remedy
these problems. In response to that report, NIH in October 1995
deployed Edison, an on-line computer system for reporting inventions.
Edison uses the Internet to (1) allow the organizations NIH funds to
enter data, including the required reports and notifications, in the
system and (2) give NIH the ability to review and analyze the
activity on any particular invention at any time.
In a recent follow-up review, the Inspector General expanded the
scope to include 12 large grantees funded by NIH, the government's
principal biomedical research agency. In fiscal year 1997, NIH had a
budget of about $10.5 billion for outside research grants, and the 12
grantees accounted for almost $2.5 billion of this amount. The
objectives of the Inspector General's review were to determine
whether NIH had implemented the corrective actions recommended in the
earlier report and to evaluate the adequacy of NIH's controls to
ensure that grantees complied with the reporting requirements of the
Bayh-Dole Act.
In July 1999, the Inspector General submitted a draft report to NIH
on the most recent review and concluded that compliance with
Bayh-Dole requirements remained insufficient. The Inspector General
found that, of 633 medically related patents issued to the 12
grantees in calendar year 1997, 490 were recorded in Edison. The
remaining 143 patents were not in Edison, and the patents did not
include government interest statements. After comparing the
information in the 143 patents with information from NIH's grant
records, the Inspector General concluded that all 143 inventions most
likely resulted from NIH-sponsored research and questioned the 12
grantees about these findings. The grantees then reviewed their
records and agreed that 79, or 55.2 percent, of the 143 inventions
were in fact supported with NIH's funding. The grantees also
acknowledged that they had not properly notified NIH of the
inventions or included a statement on their patent applications that
the inventions had been created with federal support. They did not
agree that the remaining 64 patents resulted from
government-sponsored research.
The Inspector General concluded in the draft report that NIH cannot
ensure that its grantees are complying with the requirements of the
Bayh-Dole Act in all instances. The Inspector General recommended
that NIH (1) use information available from PTO's patent database and
NIH's grant database to identify inventions that need to be recorded
in Edison, (2) improve instructions to grantees on the need for and
importance of reporting invention and patent data, and (3) review the
64 patents disputed by the 12 grantees in the study to determine
whether these patents represented inventions that should have been
reported to the government. At the time of our review, NIH had not
yet provided an official response to the Inspector General on the
draft report.
THE GOVERNMENT'S DATABASES
ON FEDERALLY SPONSORED
INVENTIONS NEED TO BE
IMPROVED
---------------------------------------------------------- Letter :3.5
Neither the Government Register nor the patent database is a
sufficient source for determining the rights the government possesses
to federally sponsored inventions. Besides being inaccurate,
incomplete, and inconsistent, the databases can be difficult to use.
The quality of data could be improved by standardizing, streamlining,
and improving the reporting requirements.
THE CURRENT DATABASES ON
THE GOVERNMENT'S RIGHTS
ARE INADEQUATE
-------------------------------------------------------- Letter :3.5.1
We could not determine the extent to which federal agencies use the
Government Register or the patent database to identify inventions to
which the government has royalty-free rights because there are no
records of such use. Agency officials said that, while they did
consult the patent database from time to time, they rarely referred
to the Government Register. PTO officials said that they receive
fewer than 10 requests a year to use the Government Register at PTO.
We found that both databases are inadequate in some respects.
Because of the errors and omissions discussed previously, the
Government Register is of limited use to an agency attempting to
determine the government's rights to federally sponsored inventions.
However, on the basis of our discussions with PTO and funding agency
officials as well as on our own attempts to use the Government
Register, we found that the Government Register would be difficult to
use even if it were accurate, complete, and consistent:
-- The Government Register is not easy to search for a particular
type of technology. There are no summary data or search fields
for the type of technology, applicant type, and so forth. A
user must know the patent number or application serial number to
access the license on a particular patent.
-- Because of its physical location, the Government Register can be
difficult to use even if the user knows the patent number. For
licenses recorded prior to May 1995, records are on a card file
and microfilm and are accessible only at PTO headquarters near
Washington, D.C. For licenses recorded after that time, the
records are on an electronic database accessible at PTO
headquarters and at selected federal depository libraries
throughout the nation.
-- The Government Register may not reveal the existence of the
government's rights to a specific patent because, as discussed
earlier, some agencies require a confirmatory license only on a
parent application. To identify rights to a parent application
from the Government Register, the user would have to determine
first that there was a parent for the patent in question and
that this parent had a confirmatory license in the Government
Register.
-- Some confirmatory licenses may not be accessible from the
Government Register even if they have been recorded. PTO
officials said they do not make available information on patent
applications that are in process except to the applicant or the
funding agency. Thus, no other agency could determine the
existence of a confirmatory license on an application in process
merely by researching the Government Register. The user would
have to know about the government interest in advance, determine
the serial number of the application, and obtain approval from
the funding agency to access the application data.
The patent database is a better source than the Government Register
for determining the government's rights to federally sponsored
inventions. It is more accessible than the Government Register in
that the official patent records are available for inspection and a
user can obtain from PTO's Internet Web site the full text of patents
issued since 1976. However, the patent database has its own problems
and can be difficult to use. As discussed earlier, the government
interest statement may not have been recorded on a patent or may
contain insufficient information. In addition, as with the
Government Register, only the applicant and the funding agency can
review a patent in process, and there are no summary listings of all
patents containing a government interest.
REPORTING REQUIREMENTS
NEED REVISION
-------------------------------------------------------- Letter :3.5.2
During our visits to federal agencies, contractors, and grantees, we
discussed the problems we had identified in the databases and
reporting process and the potential causes for these problems.
Generally, the officials we contacted agreed that the following
factors contribute to the problems in the reporting process:
-- The current reporting process is complicated and repetitive.
There appears to be little reason to have the contractor or
grantee submit two documents�the patent containing the
government interest statement and the separate instrument
acknowledging the confirmatory license�for recording the same
right, particularly if (1) the two records are not being used as
a cross-check for each other and (2) the Government Register is
rarely used.
-- The process is not uniform and consistent. While there are
general requirements, each agency may have its own set of
policies, procedures, and forms. At any one time, an individual
contractor or grantee may be dealing with multiple agencies and
must know and adhere to the requirements of each agency in
submitting data. The agencies themselves typically have their
own computerized systems for recording these data.
-- Internal controls over the process vary significantly. Because
of the record keeping and reporting requirements, the larger
agencies, contractors, and grantees typically have staff trained
and designated for this purpose. Smaller agencies, contractors,
and grantees are not able to commit as many resources and often
must use staff whose primary commitment is in other areas.
Overall, this leads to a wide range in the levels of expertise
among those responsible for the reporting process.
-- There is little direct federal oversight. The agencies may
commit resources to developing tracking systems and monitoring
the reports that are submitted. However, they generally do not
make site visits to review the records of contractors and
grantees for federally sponsored inventions. Also, the
regulations contain no specific requirement, nor has there been
agreement among the agencies, on whether and to what extent the
agencies should require utilization reports that explain how
federally sponsored inventions are being used. Without this
information, it is difficult for an agency to know whether a
contractor or grantee has commercialized or developed an
invention.
The officials we contacted said that the reporting requirements for
inventions subject to the Bayh-Dole Act and Executive Order 12591
could be standardized, improved, and streamlined. They saw no need
for a separate instrument acknowledging the confirmatory license when
the government's rights are already recorded on the patent. Also,
they agreed that the reporting could be reduced by creating a
standardized disclosure form and by making the patent itself the
instrument for documenting the election of title and the government's
royalty-free license to the invention. Oversight could be enhanced
by having PTO provide notice to the funding agencies about
activities, such as the applicant's abandonment of the patent
application, that might affect these rights.
The agency officials also said that requiring the use of a
standardized utilization report would provide the funding agencies
with the information they need to make informed decisions about how
the contractors and grantees are commercializing and developing the
inventions. Such information could be useful in determining whether
the government's march-in rights should be employed as well as
whether the inventions are being substantially manufactured
domestically.
During our meetings with the representatives from the agencies and
the funded organizations, we discussed some possible changes that
could be made in the reporting requirements. These options are
included in appendix IV. The officials generally agreed that these
suggested changes could relieve some of the reporting burden,
strengthen accountability and oversight, and improve the quality of
information in the federal databases.
We also discussed these changes with PTO officials. They said that,
while they did not necessarily disagree with the changes, the changes
might not be consistent with an international treaty now being
negotiated to standardize patent applications worldwide. They said
that the standardized application being discussed would not only
prevent PTO from requiring and disseminating more information, it
probably also would eliminate the requirement for the government
interest statement established by the Bayh-Dole Act and Executive
Order 12591. We did not evaluate the potential consequences of the
proposed application on current requirements because it is still in
the negotiation stages and because such an evaluation was beyond the
scope of our review.
THE PRIMARY USE OF A LICENSE IS
FOR RESEARCH AND INFRINGEMENT
PROTECTION
------------------------------------------------------------ Letter :4
No governmentwide data exist on how the government actually uses its
royalty-free licenses, and agencies did not have records showing how
often and under what circumstances these licenses have been employed.
Agency officials told us, however, that they value the royalty-free
licenses because they allow the government to use the inventions
without concern about possible challenges that the use was
unauthorized. The agency officials also noted that, while the
government can use its royalty-free licenses to reduce procurement
costs in those cases in which royalties are disclosed as a cost
element in the contract, such cases seldom occur.
NO CENTRALIZED RECORDS OF
GOVERNMENT USE EXIST
---------------------------------------------------------- Letter :4.1
While the Government Register and the patent database are supposed to
provide a record of the rights the government has to inventions
subject to the Bayh-Dole Act and Executive Order 12591, they provide
no information on whether or how often federal agencies use these
rights. In addition, while regulations govern certain uses of these
rights, no one agency is charged with monitoring the government's
activities. Thus, no governmentwide data are available on the
government's use of its royalty-free licenses.
During our work at the larger funding agencies�NIH, DOD, NSF, DOE,
and NASA�and two other large procurement agencies�the General
Services Administration and the Department of Veterans Affairs�we
asked for information that would show how often the agencies had made
use of their rights to use federally sponsored inventions. While
agency officials said that they value these rights, the agencies did
not have records showing how often and under what circumstances they
used them.
Agency officials told us they believed the major benefit of the
government licenses was that the agencies could use the technology in
their own research without having to pay royalties and could use the
licenses to protect the government's interests in infringement
suits.\7 An attorney from the Department of Justice who handles
infringement suits for the government agreed that a primary advantage
of the confirmatory license is that it provides an official record of
the government's specific rights to a particular invention in case
these rights are challenged.
--------------------
\7 When there is an unauthorized use or manufacture of an invention
covered by a valid claim of patent, an infringement has occurred.
Under 28 U.S.C. 1498, the owner of a patent may sue the government
for infringement by the government or its contractor in the United
States Court of Federal Claims for money damages.
ROYALTIES ARE NOT A FACTOR
IN MOST PROCUREMENTS
---------------------------------------------------------- Letter :4.2
Because the government is a major procurer of goods and services, we
were interested in determining whether the government's costs are
reduced when it procures an invention in which it has a royalty-free
license. We found that, while it is possible for the government to
avoid paying royalties in those cases in which contractors are
required to disclose them, royalties do not have to be disclosed in
most federal procurements.
The FAR requires that contractors doing business with the government
disclose certain royalty information. The purpose of the royalty
disclosure is to allow the government to determine whether royalties
anticipated or actually paid under government contracts are
excessive, improper, or inconsistent with any of the government's
rights to particular inventions, patents, or patent applications.
However, companies competing for government contracts under
sealed-bid procurements\8
are generally not required to provide royalty information.
If royalty information is desired or cost or pricing data are
obtained in negotiated procurements, the FAR provides that
information relating to any proposed charges for royalties should be
requested. The FAR royalty information clause provides that, if the
contract costs for royalties exceed $250, the contractor must submit
detailed information on the patent involved, the licenses, and the
charge. However, according to agency officials we contacted,
royalties are not a factor in the vast majority of their procurement
activities. For example, in fixed-price contracts or purchases made
through the federal supply schedule, the agency considers the price
charged rather than the company's costs. In such cases, royalty
information generally would not be provided.
Agency officials said that royalties usually are not reported as a
cost element even when cost or pricing data are obtained. A DOE
official said that royalty disclosures in contracts have occurred
more frequently in recent years because of an increase in contracts
related to DOE's cleanup activities at sites where nuclear weapons
were produced. He added, however, that contracts with such
provisions are still rare, occurring fewer than 10 times a year.
Other agency officials could not remember ever seeing a contract in
which royalties were a separate cost element.
Agency officials were not able to identify specific cases in which
royalties had been disallowed as a contract cost because the
government had a royalty-free license. Similarly, the contractors
and grantees we visited could not recall ever having received a
reduction in a royalty payment because the sale was to the
government.
Agency officials told us that they do not consider reducing
government procurement costs to be a major objective of the Bayh-Dole
Act or Executive Order 12591. In their view, the royalty-free
license provides the government with an instrument it can use if it
is unable to obtain the product in question from the vendor. They
said that, in such cases, the royalty-free license allows the
government to manufacture or to contract with another party to
manufacture the product and sell it to the government without risk of
infringement.
--------------------
\8 Sealed-bid procurements employ competitive bids, public opening of
bids, and awards.
CONCLUSIONS
------------------------------------------------------------ Letter :5
Federal agencies are not sufficiently aware of the royalty-free
rights the government has to inventions subject to the Bayh-Dole Act
and Executive Order 12591. This is because the two primary resources
for information on federally sponsored inventions�the Government
Register and the patent database�are inaccurate, incomplete, and
inconsistent. These errors and omissions are the result of federal
funding agencies', contractors', and grantees' not always complying
with reporting requirements that are themselves often complicated and
redundant.
No data are available on the extent to which the government is using
its royalty-free licenses to federally sponsored inventions. Agency
officials say the licenses are important because they allow federal
agencies to use the underlying research without concern about
possible challenges that such use was unauthorized. The licenses do
not appear to be a factor in most procurements.
MATTERS FOR CONGRESSIONAL
CONSIDERATION
------------------------------------------------------------ Letter :6
The Congress may wish to consider amending the Bayh-Dole Act to
standardize, improve, and streamline the reporting process for
inventions subject to both the act and Executive Order 12591. The
Congress could consider (1) requiring the Secretary of Commerce to
develop standardized disclosure forms and utilization reports for
federally funded inventions, (2) making the patent the primary
control mechanism for reporting and documenting the government's
rights and the only written instrument for confirming the
government's royalty-free license, and (3) requiring the Patent and
Trademark Office to provide information to the funding agencies to
assist them in monitoring compliance.
AGENCY COMMENTS AND OUR
EVALUATION
------------------------------------------------------------ Letter :7
We submitted a copy of a draft of this report to the Department of
Commerce for its review and comment. The Department stated that it
supports most of the options outlined in the matters for
consideration and appendix IV and believes that many of them can be
implemented without new legislation. We agree that many of the
options we set out could be accomplished without new legislation.
However, we left these options as matters for consideration by the
Congress because, as stated in the report, they need to be considered
in conjunction with each other and some would require changes to the
law.
The Department also said that the current draft of the Patent Law
Treaty now being negotiated would permit the Patent and Trademark
Office to require information on federal support and, if adopted,
would alleviate the concerns the Patent and Trademark Office raised
previously. As discussed in this report, Patent and Trademark Office
officials had told us that the standardized application being
considered in the treaty negotiations might eliminate the requirement
for the government interest statement established by the Bayh-Dole
Act and Executive Order 12591.
The Department said that it did not believe that confirmatory
licenses should be eliminated, noting that the government interest
statement now included in the patent application refers only to
�certain rights� that the government may have to the invention.
According to the Department, members of the public would have to
contact external sources such as the Government Register if they want
to know the scope of those rights. The Department said that it was
not proposing that a further burden be placed on patent applicants.
We did not make any changes to our report as a result of the
Department's comments in this area, as the options we present would
not eliminate the confirmatory license. Rather, they would require
that the confirmatory license acknowledgment be added to the
government interest statement on the patent and that this statement
set out the specific rights held by the government. Our options
would eliminate the need for a separate instrument acknowledging the
confirmatory license. This would reduce�not add to�the reporting
burden on the applicant.
The Department also said that it did not consider appropriate our
including information from a draft report by the Inspector General of
the Department of Health and Human Services that concerned the
reporting of inventions by grantees of the National Institutes of
Health. We disagree for three reasons. First, the information in
the Inspector General's draft report is germane to the discussions
and options presented in our own report because we were addressing
the same issue�compliance with reporting requirements for federally
sponsored inventions. Second, a representative of the Inspector
General's office told us we were accurately portraying the Inspector
General's draft report. Third, we clearly identified the source of
the material presented as a draft report and noted that the National
Institutes of Health had not yet provided formal comments.
The full text of the Department's comments is in appendix V.
---------------------------------------------------------- Letter :7.1
We conducted our work from June 1998 through July 1999 in accordance
with generally accepted government auditing standards.
We will send copies of this report to the appropriate House and
Senate committees; interested Members of Congress; the agencies
discussed in this report; William M. Daley, Secretary of Commerce;
Jacob J. Lew, Director, Office of Management and Budget; and other
interested parties. We will make copies available to others on
request.
If you or your staff have any questions or need additional
information, please call me at (202) 512-3200. Key contributors to
this report are listed in appendix VI.
Sincerely yours,
Keith O. Fultz
Assistant Comptroller General
OBJECTIVES, SCOPE, AND METHODOLOGY
=========================================================== Appendix I
The Chairman of the Senate Committee on the Judiciary requested that
we conduct a study of the government's rights to inventions under the
Bayh-Dole Act and Executive Order 12591. As agreed, our objectives
were to determine whether federal agencies (1) ensure that
contractors and grantees are complying with the provisions of the
Bayh-Dole Act and Executive Order 12591 on the disclosure, reporting,
retention, and licensing of inventions created under federally funded
projects and (2) exercise their rights to use the royalty-free
licenses to which they are entitled.
To determine how federal agencies ensure that contractors and
grantees are complying with the reporting requirements of the
Bayh-Dole Act and Executive Order 12591 on the disclosure, reporting,
retention, and licensing of inventions created under federally funded
projects, we discussed the administration of the act and the
executive order with officials at each of the five agencies providing
the most funding for research and development: the National
Institutes of Health (NIH), the National Science Foundation (NSF),
the Department of Defense (DOD), the Department of Energy (DOE), and
the National Aeronautics and Space Administration (NASA). We
discussed with agency officials the procedures they had implemented
to ensure that contractors and grantees comply with reporting and
other requirements. We also reviewed agency regulations pertaining
to the administration of federally sponsored inventions.
To determine whether federally sponsored inventions are being
disclosed and reported as required, we obtained information from two
databases�the patent database and the Government Register�maintained
by the Patent and Trademark Office (PTO). We then matched the
information obtained to determine whether, for each patent issued in
calendar year 1997, both a government interest statement and a
confirmatory license were filed with PTO. For the 1,746 cases in
which the documentation was incomplete, we contacted the funding
agencies to obtain explanations, asking the agencies to complete a
data sheet on each case.
To determine the cause of the reporting problems and database
anomalies, we judgmentally selected 22 contractors and grantees that
owned some of the patents in our analysis. These assignees accounted
for 348 cases in which discrepancies had not been resolved during our
work with the funding agencies. We asked the contractors and
grantees to determine why the discrepancies occurred.
From the group of 22 contractors and grantees, we judgmentally
selected and made site visits to 10�4 universities, 5 other nonprofit
organizations, and 1 for-profit corporation�for a detailed analysis
of their reporting compliance. For this group, we judgmentally
selected a total of 56 additional patents that were issued in
calendar year 1997 but for which no government rights had been
recorded. We asked the contractors and grantees to review the
patents and to explain how they determined that parties other than
the government had funded the inventions covered by the patents.
Where appropriate, we requested documentation to support the
explanations for the anomalies we identified in the databases.
However, in most cases, we did not independently verify the data we
obtained from the agencies, contractors, and grantees.
To determine whether federal agencies exercise their rights to use
the royalty-free licenses to which they are entitled, we held
discussions with officials from NIH, NSF, DOD, DOE, NASA, the
Department of Veterans Affairs, and the General Services
Administration and reviewed pertinent records they made available.
We also reviewed agency regulations and federal procurement laws to
determine when federal rights to inventions are to be disclosed and
used in the procurement process. We also discussed the issue of how
federal procurements affect royalty payments with the 10 contractors
and grantees selected for site visits.
We discussed overall problems and potential remedies for the
reporting and use of federally sponsored inventions with officials
from the federal agencies, contractors, and grantees included in our
review. We also discussed these issues as well as specific options
for new reporting requirements with two special groups of these
officials. One such group was the Interagency Working Group on
Technology Transfer, a group of federal agency personnel involved in
technology transfer programs. The other group consisted of
participants at the annual convention of the Association of
University Technology Managers, a nonprofit organization formed to
assist technology administrators at universities and other nonprofit
organizations in the effective transfer of technology to the public.
We conducted our work from June 1998 through July 1999 in accordance
with generally accepted government auditing standards.
RESULTS OF GAO'S INQUIRIES ABOUT
PATENTS ISSUED IN CALENDAR YEAR
1997 THAT HAD A CONFIRMATORY
LICENSE BUT NO GOVERNMENT INTEREST
STATEMENT ON RECORD WITH PTO
========================================================== Appendix II
Did not
Received receive
copy of copy of No
Agency patent patent response Total
---------------------- ---------- ---------- ---------- ----------
Department of Commerce 1 1
Department of Defense
Air Force 1 6 11 18
Army 3 3
Navy 1 7 8
Department of Energy 7 3 10
National Institutes of 15 10 7 32
Health
======================================================================
Total 24 16 32 72
----------------------------------------------------------------------
Source: GAO's analysis of data provided by the agencies cited.
RESULTS OF GAO'S INQUIRIES ABOUT
PATENTS ISSUED IN CALENDAR YEAR
1997 THAT HAD A GOVERNMENT
INTEREST STATEMENT BUT NO
CONFIRMATORY LICENSE ON RECORD
WITH PTO
========================================================= Appendix III
Not subject Confirmatory Confirmatory
to Bayh- licenses licenses not
Agency Dole or E.O. received received Unknown No response Total
------------------- ------------ ------------ ------------ ------------ ------------ ------------
Agency for 7 7
International
Development
Department of 3 4 24 31
Agriculture
Department of
Commerce
National Institute 2 2
for Standards and
Technology
National Oceanic 3 3
and Atmospheric
Administration
Other 6 4 4 14
Department of
Defense
Ballistic Missile 4 4
Defense
Organization
Defense Advanced 7 6 43 33 89
Research Projects
Agency
Defense Threat 1 1
Reduction Agency
Department of the 26 26 30 82
Air Force
Department of the 1 6 12 58 77
Army
Department of the 5 31 36 72
Navy
National Security 1 1
Agency
Department of 1 1
Education
Department of 12 223 98 9 342
Energy
Department of
Health and Human
Services
Food and Drug 1 1
Administration
National Institutes 116 168 379 663
of Health
Public Health 32 32
Service
Other 23 23
Department of
Transportation
Federal Aviation 1 1
Administration
U.S. Coast Guard 1 1
Department of 2 3 5
Veterans Affairs
Environmental 5 2 2 9
Protection Agency
National 3 13 8 26 50
Aeronautics and
Space
Administration
Nuclear Regulatory 1 1
Commission
National Science 60 101 161
Foundation
Tennessee Valley 1 1
Authority
=======================================================================================================
Total 28 472 491 81 602 1,674
-------------------------------------------------------------------------------------------------------
Source: GAO's analysis of data provided by the agencies cited.
OPTIONS FOR STANDARDIZING,
STREAMLINING, AND IMPROVING
REPORTING REQUIREMENTS UNDER THE
BAYH-DOLE ACT AND EXECUTIVE ORDER
12591
========================================================== Appendix IV
In this report, we state that the Congress may wish to consider
amending the Bayh-Dole Act to standardize, improve, and streamline
the reporting process for inventions subject to both the act and
Executive Order 12591. Specifically, such changes could include (1)
requiring the Secretary of Commerce to develop standardized
disclosure forms and utilization reports for federally sponsored
inventions, (2) making the patent the primary control mechanism for
reporting and documenting the government's rights and the only
written instrument for confirming the government's royalty-free
license, and (3) requiring the Patent and Trademark Office (PTO) to
provide information to the funding agencies to assist them in
monitoring compliance.
During our meetings with representatives from federal funding
agencies, contractors, and grantees, we discussed options for changes
to the reporting requirements. The officials generally agreed that
the types of changes suggested below could improve the quality of
data available and reduce the reporting burden. Officials from PTO
told us that they did not disagree with these suggestions. However,
they pointed out that an international treaty is being negotiated
that would standardize patent applications and could affect the types
of information that could be required on a patent application.
The options we discussed are as follows:
-- Eliminating the requirement that the contractor or grantee
submit a confirmatory license as a separate written instrument
on each invention. These instruments are not always submitted
or used, and the license itself can be more easily documented on
and accessed from the patent itself. In effect, this change
would appear to eliminate the need for the Government Register.
-- Requiring the Department of Commerce to develop, and by
regulation require the use of, a standardized invention
disclosure form for all federal agencies, contractors, and
grantees. Under the current procedures, each contractor or
grantee generally has its own form. A standardized form would
make the procedure uniform and consistent among all the
agencies, contractors, and grantees.
-- Making the patent the only instrument for documenting the
confirmatory license. This would entail eliminating the current
requirement that the contractor or grantee file a separate
election to retain title. Instead, within 2 years of disclosure
(or within 1 year if publication, sale, or public use of the
invention has initiated the 1-year statutory period in which
valid patent protection can be obtained in the United States),
require the contractor or grantee to file a patent application
with PTO. This would reduce a step in the process for both the
applicant and the agency and, in most cases, shorten the time
between the date the contractor or grantee realizes it has an
invention and the date it applies for a patent.
-- Requiring that the government interest statement on the patent
application include the name of each specific agency that funded
the research, the contract or grant number(s) under which the
invention was created, and a provision stipulating that the
government has a nonexclusive, paid-up, royalty-free right to
the use of the invention.
-- Requiring that the contractor or grantee provide a copy of each
patent application�including divisionals, continuations, and
continuations-in-part�to the funding agency.\1 This would inform
the funding agency that the contractor or grantee has filed the
application within the required time and that the agency has a
record of all patent applications related to the original
invention disclosure. Since patent applications are standard
for all applicants, this also means that all funding agencies
receive standardized forms.
-- Requiring PTO to (1) inform each funding agency named in a
government interest statement that PTO has received a patent
application on the invention and (2) provide the serial number
of the application to the agency. This provides a cross-check
for the funding agency to ensure it has received the patent
application. Also, the agency has the serial number if it needs
to interact with PTO.
-- Requiring PTO to inform the funding agency of major events�such
as the abandonment of an application�that would affect the
government's rights during the applicant's prosecution of the
patent. This would allow the funding agency to take timely
action at any point its rights to the invention are threatened.
-- Requiring PTO to show in its Patent Gazette�the official journal
on patents and trademarks�that the issued patent is subject to a
government interest. This would provide notice to the funding
agency and the public that the patent has been issued and that
the government has rights to the invention. Anyone wanting more
information could then access the patent from PTO's Internet Web
site or official patent files.
-- Permitting PTO to charge the applicant a fee for an application
that contains a government interest section. The fee should be
commensurate with PTO's additional costs for its services under
the revised requirements. This is in keeping with PTO's
position of being self-sufficient through fees. The fee would
be paid by the applicant and would be one additional factor the
contractor or grantee would need to consider in deciding whether
to file a patent application. However, the additional cost of
the government interest fee should be offset to some extent by
the reduced costs of the lesser reporting burden on the
contractor or grantee.
-- Requiring the Department of Commerce to develop a uniform
utilization report whereby contractors and grantees holding
title to federally sponsored inventions must report annually on
the utilization of each invention. These utilization reports
could be used to provide information on the status of
development, the date of first commercial sale or use, and the
gross royalties received by the contractor or grantee. The
regulations already allow�but do not mandate�agencies to require
their contractors and grantees to provide these types of data.
Among other things, a utilization report on every invention
would help the funding agency to determine whether the
contractor or grantee is actively pursuing development and
commercialization of the invention�one of the agency's oversight
responsibilities for inventions subject to the Bayh-Dole Act and
Executive Order 12591.
Some of these changes could be made by the Department of Commerce
through revisions to the existing regulations. However, the Congress
may need to consider changes to the law because (1) the changes need
to be made in conjunction with each other and (2) such actions as
eliminating the need for the Government Register, establishing
additional requirements for inventions created under Executive Order
12591, and placing additional requirements on PTO require
congressional action. Also, the Congress may wish to consider the
impact of any treaty�such as the one now being negotiated�that would
affect the types of information that could be required on the patent
application.
(See figure in printed edition.)Appendix V
--------------------
\1 A parent application is the original application for a particular
patent. Subsequent applications may relate back to the parent either
as a divisional, a continuation, or a continuation-in-part. A
divisional is a later application that is carved out of a pending
application and discloses or claims only subject matter disclosed in
the earlier application. A continuation is a second application for
the same invention claimed in a prior application that discloses and
claims only subject matter disclosed in prior applications and
introduces into the case a new set of claims. A continuation-in-part
repeats some substantial portion or all of the earlier application
but adds matter not disclosed in the earlier case.
COMMENTS FROM THE DEPARTMENT OF
COMMERCE
========================================================== Appendix IV
KEY CONTACTS AND STAFF
ACKNOWLEDGMENTS
========================================================== Appendix VI
GAO CONTACTS
Susan D. Kladiva, (202) 512-3841
John P. Hunt, Jr., (404) 679-1822
Frankie Fulton, (404) 679-1805
ACKNOWLEDGMENTS
In addition to those named above, Mark Abraham, Deborah Ortega, Paul
Rhodes, and Mindi Weisenbloom made key contributions to this report.
*** End of document. ***